It isn't often that a stock is up more than 120% in the past year and still considered to have plenty of room to run. But not every company is like Coinbase Global (COIN -3.57%).
Rising to become one of the crypto industry's most prominent leaders, crypto exchange Coinbase is rising from the ashes of the most recent bear market and has its sights set on returning to its glory days. As crypto gears up for a new bull market, investors would be wise not to overlook this lucrative opportunity.
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A new company takes shape
A year ago, the prospects of Coinbase surviving a brutal bear market and making it to the next bull market looked slim. As the crypto winter set in and activity on its platform dried up, Coinbase posted a $1 billion net loss.
But since then, much has changed. A company that once depended on one source of revenue now boasts a suite of products that can produce income in any market.
Previously accounting for more than 90% of total revenue, transaction fees now make up less than half today. Comprised of staking rewards, monthly subscription packages, custodial services, and more, Coinbase's Subscriptions and Services segment has proved an invaluable investment and picked up much of the slack.
Adding to its transformation, Coinbase developed innovative technologies and products to further diversify its revenue streams. For example, Base, the company's own blockchain, launched in August and has already brought in $5.7 million in revenue. That number likely will increase as the ecosystem matures and crypto activity picks up.
Furthermore, Coinbase is slowly becoming the preferred intermediary for onboarding deep-pocketed institutional investors looking to explore the power of blockchains and cryptocurrencies. Since Q4 2018, Coinbase has seen a 1,200% increase in transaction volume from its institutional clients.
More recently, Coinbase reached a landmark agreement with some of Wall Street's biggest names, offering custodial services to eight of the 11 new Bitcoin ETF providers. With billions of dollars flowing through these new assets, the company may have found yet another lucrative source of income.
Coinbase is going global
Perhaps the most intriguing development during the past year is Coinbase's global expansion. Although the company commands about 75% of the U.S. crypto market, it recognized its international presence was lacking. But that is quickly changing.
As it currently stands, Binance is the clear leader on an international scale. But recent legal battles it faces in the U.S. and increasing scrutiny abroad are giving Coinbase a chance to enter new markets.
Capitalizing on this window of opportunity, Coinbase initiated its "Go Broad, Go Deep" expansion strategy at the beginning of 2023. Today, Coinbase operates in more than 100 countries, provides its Coinbase One subscription plan in 38 countries, launched an international derivative exchange, and offers stablecoin and staking products in more than 110 countries.
It also recently established a European headquarters in Ireland and plans to take advantage of the European Union's favorable crypto policies to solidify its presence in one of the largest economies in the world.
Building out its global reach might prove to be the most significant catalyst for Coinbase to continue growing. An analysis by the investment firm VanEck suggests that by the end of the year, Coinbase could see a 500% jump in volume on its derivative exchange should it gain approval, as expected, in the EU and other international markets.
Plenty of untapped potential
As crypto finally shook off a brutal crypto winter, Coinbase followed suit and rebounded more than 400% in 2023. Yet, despite this monumental surge, it remains more than 50% below its all-time high today.
Should a bull market return -- which, given crypto's cyclical nature and recent resurgence, seems more like a matter of "when" than "if" -- Coinbase has what it takes to surpass its peak valuation. At the time of the last bull market, Coinbase was but a mere fraction of the company it is today and, yet, was worth nearly $90 billion, three times more than its current valuation.
With its revamped business model and international expansion, don't be surprised if it soars to new highs sooner than later. As crypto continues its historic journey, no other company is in a better position to capitalize on the burgeoning asset class than Coinbase.
